Bankrupt Bed Bath & Beyond Seeks $15M in Damages from Yang Ming in FMC Case

Bankrupt retailer Bed Bath & Beyond continues to cite the shipping industry and its business practices during the pandemic as contributing to the demise of its operations earlier this year. In its latest move, the company filed a complaint with the Federal Maritime Commission seeking reparations totaling more than $15 million from Yang Ming for denial of service, premium fees, and detention and demurrage charges incurred in 2021 and 2022.

The filing with the FMC on September 12 is the latest in a series of legal moves by the bankrupt company attempting to seek restitution which would contribute to the bankruptcy settlements. In April, the company also filed a complaint with the FMC against Orient Overseas Container Line (OOCL) and OOCL (Europe) alleging that the carrier had “coerced,” “exploited” with price inflation in container shipping, and “deliberately” denied space to the retailer resulting in $25 million in excess costs as well as an additional approximately $6.4 million in D&D fees it contends resulted by OOCL’s business practices between 2020 and 2022.

Yang Ming took a preemptive step in April 2023 filing a complaint in the Southern District of New York, Federal Court. They sought to block Bed Bath & Beyond’s claims of $7.8 million in actual costs due to the issues cited with the service provided and fees imposed by the carrier. A week after the filing, the retailer informed the court of its voluntary bankruptcy petition and in June the court issued an automatic stay of "the commencement or continuation” of a judicial action based on the bankruptcy. The court case could proceed if Bed Bath and Beyond resolves the bankruptcy.

In its filing to the FMC, the former retailer cites many of the same issues as before, contending that “Yang Ming took advantage of price inflation in the container shipping sector and unfairly exploited its customers.” They allege that the carrier “engaged in a practice of systematically failing to meet its service commitments,” resulting in enormous expense to Bed Bath and Beyond, and then filed a “retaliatory declaratory judgment complaint,” in the U.S. District Court. Like the complaint against OOCL, they allege that Yang Ming flouted its service commitments, engaged in a practice of coercing the shipper, charged unreasonable D&D fees when it was not possible to return containers, and refused to negotiate. 

At issue is an annual service contract that began on May 1, 2021, for the transport of 1,000 FEUs. They allege the carrier provided no space during the first month of the contract and when confronted admitted that it had over-committed to its customers. During the 12-month period, they report Yang Ming carried just 149 FEUs, 85 percent below the commitment resulting in more than $6.6 million in damages as the retailer sought other space for its containers. They further contend that Yang Ming coerced them into paying nearly $300,000 in surcharges, and charged nearly $750,000 in D&D fees, and refused refunds on the fees.

Citing a total of nearly $7.7 million in costs, Bed Bath & Beyond in the filing seeks an award of reparations. Under FMC rules they are seeking that the amount be doubled based on a conscious pattern which constitutes violations of the Shipping Act.

The complaint highlights that this is one of numerous similar complaints now before the FMC each citing denial of service. Many shippers have alleged that the carriers during the surge in shipments and capacity constraints failed to honor service contracts. Each of the complaints contends that carriers instead put the contracted space into the spot market where they could realize dramatically higher prices. Several service complaints have been settled under confidential terms while most of them remain in front of the FMC.